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Human Capital, Self-Esteem, and Income Inequality

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  • Gradstein, Mark
  • Ventura, Luigi

Abstract

We introduce into a human-capital based growth framework utility from self-esteem, driven by academic achievements. Self-esteem, through its effect on human capital, is shown to shape the intertemporal evolution and the persistence of income inequality, in general, and across population groups. Inequality persistence is obtained because of the wedge that the self-esteem component creates between households whose academic achievements are high enough as opposed to those whose achievements are insufficiently low. Among the several extensions, it is shown that controlling parenting style can exacerbate income inequality while reducing children’s self-esteem.

Suggested Citation

  • Gradstein, Mark & Ventura, Luigi, 2023. "Human Capital, Self-Esteem, and Income Inequality," CEPR Discussion Papers 18474, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18474
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    More about this item

    Keywords

    Cultural traits;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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